Most businesses starting in South Dakota selling a product or offering services need to register for a South Dakota sales tax license. This is commonly referred to as a seller’s permit, sales tax permit, sales & use tax number, or sales tax registration.
The South Dakota Department of Revenue obtains the sales tax license when filing the South Dakota Tax Application. Businesses can register to begin hiring employees, collecting withholding taxes, and registering for a sales tax license.
Check out the rest of this guide to determine who needs a sales tax license, what products and services are taxable, how to register for a permit, and reporting requirements.
Related: South Dakota Startup Checklist
Who needs a sales tax license in South Dakota?
A business must register for a sales tax license in South Dakota when:
- A business has an economic nexus. Economic nexus means having a physical presence in the state, such as having a physical location like a retail store or office or using a warehouse or fulfillment center to store inventory.
- Selling tangible personal property and taxable services in South Dakota (including occasionally selling items at craft shows, fairs, seminars, shows, etc.).
- Selling admissions to places of amusement, athletic, and cultural events.
- Hiring employees based in South Dakota (including sales representatives or agents).
- An online business in South Dakota sells taxable products to South Dakota residents.
- A remote seller who sells over $100,000 in tangible personal property or has over 200 transactions annually to residents in South Dakota.
What products and services are taxable in South Dakota?
Physical products
There are a few exceptions, but almost all physical products are taxable when sold at retail in South Dakota. Common examples include:
- General merchandise like furniture, appliances, and clothing
- Titled or registered items like vehicles
Prescriptions, parts used on agricultural equipment, and some pesticides are tax-exempt. See the full list of sales tax exemptions in South Dakota.
Digital Products
Digital products are taxable in South Dakota.
Services
Most services are taxable in South Dakota, however, there are a few exceptions, some of which include:
- Health services
- Educational services
- Agricultural services
- Forestry services
- Services provided by certain membership organizations
How to register for a sales tax license in South Dakota
A sales tax license can be obtained by registering for the South Dakota Tax Application with the South Dakota Department of Revenue.
Information needed to register includes:
- Legal business name
- Type of business entity: sole proprietorship, partnership, corporation, Limited Liability Company (LLC)
- Description of what products or services are being sold
- Physical address and mailing address of the business
- North American Industry Classification System (NAICS) code
- Federal Employer Identification Number (FEIN) with the IRS
- Name, address, SSN, driver’s license number, phone number, and email of owners/officers/members
Sales tax reporting
How is sales tax collected?
When a business sells a taxable product or service, it charges the appropriate sales tax rate to the customer. The business collects this tax, which it then sends to the South Dakota Department of Revenue.
How much is sales tax in South Dakota?
If the purchase is made at a store or in a mobile location, the sales tax rate varies depending on where the sale occurred in South Dakota. In addition to the statewide sales tax, cities and municipalities may add additional sales taxes. When shipping in-state, the sales tax is based on the purchaser’s address.
The municipal gross receipts tax (MGRT) is most commonly applied to selling alcoholic beverages, eating establishments, lodging accommodations, etc. To find sales tax rates, see the South Dakota Department of Revenue’s sales tax rates by address page.
When are South Dakota sales tax returns due?
The Department of Revenue will determine a filing frequency based on the expected sales volume, which will be monthly, quarterly, or annually.
Filings are due on the 20th day of the month following the reporting period unless the 20th falls on a weekend or federal holiday, which would move to the next business day.
A filing indicating no sales is still required even if the business had no sales during the reporting period.
South Dakota Sales Tax License FAQs
How much does a South Dakota sales tax license cost?
There is no cost for a sales tax license in South Dakota.
How long does it take to get a South Dakota sales tax license?
Typical processing for a sales tax license in the state of South Dakota is up to 5 days.
Do you have to renew your South Dakota sales tax license?
The sales tax license is a one-time registration, and no renewals are needed. Be mindful that if any information about the business changes, such as the mailing address, additional locations, or change in ownership, those changes need to be updated with the South Dakota Department of Revenue.
How do I get a wholesale license in South Dakota?
A business can purchase items to resell without paying state sales tax. The tax liability is passed from the wholesaler or distributor to the retailer, who will then charge sales tax to the end-user of the item.
Wholesalers and distributors will require a sales tax number and a completed South Dakota Certificate of Exemption form (also referred to as a wholesale license, resale certificate, or sales tax exemption certificate) to document that the purchased items are for resale.
Is a business license the same thing as a sales tax license?
No – A business license and a sales tax permit are different. Here’s how they differ:
A business license gives you the right to operate your business in a specific area, while a sales tax permit allows you to collect sales tax from your customers on behalf of the state.
In many cases, a business will need both.
